13 Colo. 534 | Colo. | 1889
delivered the opinion of the court.
The points relied upon by appellants for a reversal of the judgment may be briefly stated as follows: (1) Insufficiency of the evidence to establish the alleged agreement. (2) Failure of the proof to show the performance by plaintiff of the conditions imposed upon him by the terms of the alleged agreement. (3) That said agreement is ultra vires, and cannot be enforced against the company if proven.
The uncontroverted evidence discloses that the defendant company was organized by E. F. Lamb, A. V. Scherrer and J. Jay Joslin, on or about the 2d day of January, 1884, with a capital stock of $300,000. The purposes of the organization were set forth in the articles
If it was anticipated that this amount could be realized before that date from the sale of certificates of stock in the corporation, it soon became evident that such anticipation would not be realized; and, as the time approached for making the payment, the officers of the company evidently became much alarmed for fear that the com
In reference to the negotiations Dr. Smythe says: “ The substance of the proposition to Mr. Stevens was like this: that, if he could procure for the company $15,000, the company would give him $5,000 in stock, or, for a less amount, a proportionate amount of stock.” And in this statement the witness is corroborated, not only by the plaintiff'and Mr. Lamb, but also, in the main, by Mr. Scherrer; although the latter states that he and Mr. Lamb were to furnish the stock, and not the company.
Under this evidence, the trial court could not have done otherwise than find that the officers of the company were acting for and on behalf of the corporation in these negotiations, and that Mr. Stevens was promised remuneration for his services in the capital stock of the company, as testified by Dr. Smythe. Whether or not such officers had authority from the corporation to so agree we will consider later.
Stevens, having consented to undertake to raise the money for the company upon the terms proposed, opened negotiations for the same writh the Union Bank of Den
The $5,000 which plaintiff says he was instrumental in procuring for the company, and for which he claims a commission in stock, under the contract, was procured from said Union Bank. In reference to this loan, Stevens, in substance, testifies that he went to this banking house upon the next morning after the company had enlisted his services in the matter, and saw Mr. Todd, the cashier, in reference to the loan, and told him that the defendant desired to borrow $15,000. That Todd stated that a similar application had been made to him, and he could not loan that amount. “I then talked with Mr. Todd with reference to the loan; told him all that I knew about the financial standing of the company, the lands it had and the number of cattle, and the mortgages that were on both the land and the cattle; and also told him in the very first conversation that my impression was that the individuals — the trustees — would sign the note. Mr. Todd told me in that conversation if the Arapahoe Cattle & Land Company, and also Mr. Scherrer and Mr. Joslin and Mr. Lamb, would sign a note, he would loan them $5,000; and in the same conversation he also said that he would like to have the stock of the company which was unissued remain in bank; also that he should know what stock was issued during the time of this loan. I immediately went to the office of the Arapahoe Cattle & Land Company, and saw Mr. Lamb, the secretary, at that time. I told Mr. Lamb the conversation I had with Mr. Scherrer the night before — the entire conversation. I told him Mr. Todd would loan $5,000 to the company, provided they signed the note individually, and provided the stock was left in the bank. Mr. Scherrer was also in the office; that is my recollection. He then went' and consulted
Having determined that the officers of the corporation, acting for and in behalf of the company, did make the agreement with Mr. Stevens as alleged, and that Stevens performed the conditions imposed upon him by said agreement, to the extent of securing $5,000 for the company, the liability of the company upon the contract becomes fixed, provided the corporation might lawfully make such a contract, unless its officers, in making the same, were acting beyond the scope of their authority.
As we have already seen, the corporation was organized for the purpose of buying and selling lands, horses, cattle, etc., “also all other business incidental to stock-raising.” Scherrer and Lamb were general officers of the company, and must be presumed to have the powers usually conferred upon such officers. In addition to this they were duly empowered to purchase the Gebhardt stock, etc., and this authority must be held to be as broad as the transaction. The power to purchase necessarily carried with it the power to obligate the company to pay, notwithstanding the fact that a by-law of the company forbade the contracting of any debt for the company except by order of the board of directors. Plaintiff was not a member of the company, and his rights cannot be affected by a by-law restricting the general powers of the officers of the company, of the existence of which by-law he is not shown to have had notice. Mor. Priv. Corp. § 500; Ang. & A. Corp. 370, note a;
It is said that the contract with Stevens was fraudulent, and for this reason cannot be enforced. No question of fraud, however, is raised by the pleadings. Fraud must be alleged before it can be proven, and in this case neither was attempted.
It is not necessary that shares in a corporation be paid for in cash. It has been held that-the-managing officers of a corporation may, in their discretion, issue full paid-up shares for real estate, labor and materials useful in carrying on the corporate business. In fact, such payment may usually be made in money or its equivalent, and if in the latter, the transaction cannot he impeached for error of judgment on the part of the officers of the company as to the value of the services or property. Good faith and the exercise of an honest judgment meet the requirements of the law. Mor. Priv. Corp. §§ 426, 429; Schenck v. Andrews, 57 N. Y. 133; Douglass v. Ireland, 73 N. Y. 100; Iron Co. v. Drexel, 90 N. Y. 87; Lorillard v. Clyde, 86 N. Y. 384.
The above cases were all decided under the provisions of the act of 1853 of the state of New York, which act was amendatory to the provisions of a previous law of the state requiring that nothing but money should be received as payment for the stock of incorporated companies. By the amendment the trustees of such companies were authorized to purchase any property necessary for the corporate business, and in payment therefor to issue stock “tothe amount and value thereof.” Under this act it may now be considered as the settled doctrine in that state that the trustees, in taking property, must exercise their discretion, and that their judgment , as to the value of the property, and the necessity for it, will not be interfered with, in the absence of fraud. Thus it is said in Schenck v. Andrews, supra: “ They were the
From all that appears in this case, the directors, in making the agreement with Stevens, were acting in good faith for the company, doing what they considered at the time was advisable in order to provide the necessary funds to meet the payment then due upon the Gebhardt purchase, to make which purchase, it would seem, was the primary object of the incorporators in organizing the
We do not understand that any complaint is made as to the amount of the judgment, provided it be determined that Stevens can recover upon the express contract. Between the time at which plaintiff became entitled to this stock, under the terms of the contract, and the time of trial, two dividends had been declared upon this stock, of twelve per cent, each, and the amount of such dividends, added to the market value of the stock, give the amount of the judgment. The judgment Is affirmed.
Affirmed.